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Wednesday, June 19, 2013

Innovative Uses to Increase Your Return on Investment in Technology

Most restaurants with revenue above $1 million have invested in a POS system.  These systems track the entire sales cycle and provide tremendous reports to help managers understand their business.

Popular reports show customer counts, server productivity, menu item popularity and scheduling efficiency.  Since all customer orders are tracked by time of day, the same data can be used to track arrival rates and average service time.  This information combined with your seat count can be used to predict the length of lines on busy nights.  Your host staff needs this data when communicating approximate wait times.

Guests counts by day of the week can be used to improve your orders for highly perishable items purchased daily.  If you offer a complimentary bread basket, you can use the information to reduce waste.  Standard recipes can be combined with expected menu item sales counts to help forecast demand for expensive protein items.

There are reports which show menu item counts by meal course.  Dividing these category counts by your covers will provide percentage data which can be used in developing a customer profile.

Restaurant chains have developed pricing strategies built around a dinner for two including one split appetizer and two entrees.  The data used to develop this strategy comes from the menu item reports.  You can use the recap sales by meal course to find out what percentage of your guests choose a dessert.  A server contest could help raise this percentage and your POS system will provide the name of the winner.  Menu item sales may be tracked by server.

For longer periods of time, including weekly, monthly and annual reports, the system tracks your check average.  This number equals the total revenue divided by the total number of guests served.  Some systems allow you to enter the number of seats.  The total number of guests served divided by the total number of seats equals the turnover rate for your dining room.

Sales equal the number of seats times the number of turns times the check average.  Should you expand your dining room?  What will help raise the check average?  Are we losing business?  These questions can be answered with standard reports used together to see the whole picture.

If you track the number of prospective guests who decide not to wait for a table during busy periods, decisions regarding your capacity can be made using this data.  This information is particularly important for restaurants in resort areas or which depend on sales from just one day a week.

Many restaurants build their menu each day using items available in the local marketplace.  A significant share of the daily revenue is derived from sales of specials.  If your chef has an eclectic approach, you will find it more difficult to predict customer behavior.  Your covers forecast may be accurate.  However, you won't have a wealth of data on specific menu item popularity.  Expect a higher number of sold out entrees and greater spoilage despite the use of market fresh ingredients.

POS systems can be setup to track more than just Special 1, Special 2, Special 3, etc.  You can create galleries of specials to track the preferences for specific entrees.  This data can be used to create seasonal menus which will reduce the number of daily specials while simultaneously offering the most successful menu choices.  This menu approach can help chefs and managers improve forecasts and increase guest satisfaction.

Focused menus are generally used by ambitious companies with a national strategy.  It is much easier to order food for a limited menu built around burgers, pizza, chicken, burritos, or stir fried Asian combinations.  Your POS system manufacturer may offer enterprise reporting with many of the best reports available for a region, state, metropolitan area or the entire company.

These restaurant management groups track benchmark statistics including average unit volume, food cost percentage, labor cost percentage and gross profit.  Stores which are not meeting company objectives receive more attention from the headquarters staff.  The enterprise data can be sliced in more creative ways to make comparisons more meaningful.

The location profile can be used to create logical groupings including interstate exit stores, airport stores, mall food court stores, urban locations, locations near schools, etc.  Using targeted benchmark data can provide useful information for improving operations results and in selecting future sites for expansion. 

Tuesday, June 18, 2013

See Your Menu Through the Eyes of Your Customer

Pretend you are dining at a restaurant for the very first time.  You have just opened the menu handed to you by your host.  The front cover has a picture of a boat, the name of the restaurant in large font, and the family name of the owners.  A short subtitle contains the words seafood, fine and dining printed in italics.  The back cover explains the restaurant's history, the address, phone number and the same information for a sister restaurant.

Opening the menu, you unfold an 11" x 17" sheet of paper.  Each side offers 8.5" x 11" of space.  The half inch margin all around offers 150 square inches of space.  The restaurant owners use this space to create a guide to help you through the order process.  They want you to enjoy your experience.

Where do you begin to look for information?  The center feature box on the right side?  Maybe you direct your eyes to the upper left hand corner.  You may scan the entire document quickly to make sure the term fine dining promised on the front cover doesn't mean too expensive.  Once the pricing scheme is mastered, you'll try to solve the main puzzle.  What should I order?

The menu may have photos, feature boxes bordered in bold colors and other eye catching magnets to grab your attention.  One of these feature boxes may offer specialties of the house or family favorites.  Perhaps, the menu reflects a Mediterranean theme.  It is common to see the various meal courses in separate boxes including appetizers, entrees, salads, soups and side dishes.

In a short time, your waiter will arrive and ask if you have any questions.  In addition, they may describe the specials of the day.  They should ask if it's your first time dining in the restaurant.  Hopefully, they will make you feel at home while describing the popular dishes and cooking techniques employed in the kitchen.

Normally, you will be given a few moments to make your preliminary short list.  The waiter will return and ask if there are any other questions or possibly a simple "Are you ready to order?"

Depending on your selections, there will be different options and you will be asked to make more decisions.  Options will include desired dressings, toppings, side dishes (complimentary and additional charges), cooking method and temperature.

Remember, the owners want to help you truly enjoy your dining experience.  They have a major investment in the marketing tools used to get you through the front door.  They designed the menu to insure their guests order and receive great meals, return again often and tell others of their excellent dining experiences.

If the owners accomplish their objective, you have an excellent chance of enjoying your meal including the atmosphere, your food and the companionship of your fellow diners.

Some restaurants do a great job accommodating parties wishing to share their selections.  They offer their guests additional plates and silverware.  Restaurants specializing in shellfish dishes often offer bibs, special equipment and instructions for separating the food from the shells.

Since the number one financial objective of the restaurant is to make a profit, your entire experience will be designed to help you spend money.  Generally, starters (including appetizers, salads and soups) are more profitable on a % basis than the entrees.  Guests who are made to feel welcome may linger for a dessert course.

The dessert course is more profitable than the starters.  Commonly, you will be handed a separate dessert menu and the waiter may have strong opinions.  Everyone wants you to leave with a great taste on your tongue.

Some restaurants use the valuable space in the menu to highlight additional charges for splitting entrees, minimum dollar limits, and charges for items generally offered for no additional charge.  You may see a $10 charge for splitting an entree.   Bleu cheese dressing may cost you an extra $1.  Guests seeking a meal during the dinner period may be asked to spend at least $25 each.

Seafood market prices can change significantly from week to week.  Some restaurants use the phrase "market pricing" on dishes which feature raw ingredients with the most volatile prices.  Lobsters and whole fish may be sold by weight.  Other shellfish may be sold by the dozen.  A three pound whole fish sold for $25 per pound will show up as a $75 charge on the check.

Your guest check may seem too high for the meal you were served.  Take a look at the line items with the highest prices.  I have been charged $100 for a mixed shellfish appetizer in a restaurant featuring entrees between $25 and $40.  The waiter never mentioned the price when describing the presentation and optional sauces. 

Ask for a full accounting if anything appears to be amiss prior to handing over your credit card or cash.

Monday, June 03, 2013

Managing Wait Time in Food Service Operations

A restaurant can significantly impact both sales and profit results through effective management of the guest experience.  Specifically, the number of guests served is dependent on the number of people who arrive at your restaurant to have a meal and the service time required to prepare and deliver great meals.

Restaurant patrons spend lots of time waiting for service.  They may wait to speak with the hostess.  After negotiating with the hostess, there is often a wait to be seated.  Once seated, guests wait for the server to explain specials, take preliminary drink orders and answer menu related questions.

Once the guests have decided what they wish to order, there is a wait to place the order and another wait while the food and drinks are being prepared.  The initial delivery starts a process of enjoying the meal and giving the wait staff feedback.

There could be a second order if the initial order was limited to appetizers and drinks.  Guests wait again for the main course to arrive.  Often there are waits for food to be cooked again or for a requested condiment.

At the end of the main course, many guests are interested in either a dessert or an after dinner drink.  These items arrive faster than the main course and patrons interested in the dessert course are often not in a rush to leave.  On the other hand, some patrons just want a cup of hot coffee delivered quickly along with the check.

Once the final course is over, the guest will look for the wait staff to request the check.  Time waiting for the check to arrive should be short.  Too often, guests wait for many minutes before the check presentation.

Picking up the cash or credit card and completing the transaction also takes time.

Out in the kitchen, the number of orders in the queue can get out of control.  Busy dining rooms produce hundreds of printed orders to be filled.  Delays in the appetizer course can dramatically impact the customer experience.  Attention to customer preferences often impacts the success of the main course execution.  Communication between the wait staff and the kitchen staff is documented on POS system printouts.  Expediters may see special instructions on when to fire an order.

Excellent servers are true artists.  They anticipate the guest's needs and insure the overall experience is top notch.  At the same time, these servers tend to understand the link between efficient service and their compensation which is predominantly provided by diners.

If your operation offers very large entree portions and generous side dishes, your guests may not have room for dessert.  Often guests will be willing to stand in line to receive great value for their dining dollar.  Portion size and food quality are key factors in the decision to stand in a long line.

Restaurant revenue in a value operation is highly dependent on table turns.  The faster tables are turned, the more guests are served per hour.  Since these guests have waited in the long line, they are expecting a different service environment than a fine dining experience.

It is possible to push guests through early plate pick ups, dropping the check earlier than expected and other speed tactics.  Don't make your guests feel they are being processed.  Service should be efficient but not rushed. 

Buffet guests avoid many wait time issues.  They may have to wait to be seated.  Normally, there is a wait for the beverage order.  Once the beverage order has been placed, they may find another line at one or more buffet stations.  Some buffet operators handle the checkout before the guest is seated.  This tactic eliminates the wait for a check from the server.

Labor Costs and the Affordable Health Care Act - Sole Proprietors

Many employers have focused like a laser beam on the penalty clause for not providing minimal essential coverage.  These employers may be subject to a penalty.  The penalty is significant and employers need to carefully craft a strategy to avoid the cost associated with non-compliance.

For sole proprietors with a single restaurant, the penalty most likely will not apply.  There is no penalty for not covering part-time employees.  Most server staff employees work part-time on high volume shifts starting on Friday and ending on Sunday.  The kitchen may also employ part-time general help for the busy shifts.

Full-time employees, including management, make up the backbone of the restaurant team.  Taking the view of avoiding the penalty, sole proprietors would need to have at least 31 full-time people with none covered to be subject to any penalty.

The penalty provision requires employers with more than 30 full-time employees who are not offered health care coverage to pay a penalty.

Penalty= (Total number of uncovered full-time employees - 30) x $2,000

For example, a restaurant with 33 full-time employees who were not offered coverage would pay $6,000.  This works out to $182 per full-time employee or nine cents per hour.

Let's take a look at employee morale.  Savvy companies, who realize they have an opportunity to attract top talent, will offer key employees better pay and health insurance coverage.  It's not too difficult to imagine hard working part-time staff striving to attain full-time status.  Health care coverage and a bigger paycheck are their reward.

What about growing beyond the first location?  Will the new law inhibit small business growth?

As a company grows from a single restaurant into a small regional chain, management should review their organization options.  Often chains use separate corporations or LLCs to limit the risk of one restaurant weakening the financial health of the entire group.  Every restaurant is a separate company.  The management group is also setup as a separate company.  This same risk avoidance strategy works well with the health care act's penalty clause.  Few restaurants need more than 30 full-time employees.

Restaurant Data Pros

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